If you currently own bitcoin, you need to take some steps now to be prepared for the Bitcoin Cash fork, currently scheduled for 01 August. First, read this excellent post from Jimmy Song:
Jimmy does a great job of explaining the situation. I would definitely suggest following him on Twitter and Medium.
It’s difficult to predict exactly what will happen after the fork, but most scenarios fall into one of two camps:
- Bitcoin Cash completely fails; Bitcoin moves forward
- Bitcoin and Bitcoin Cash both survive, each with some substantial percentage of the current total market capitalization and hashing power
If the first scenario plays out, you probably don’t have much to worry about. I would suggest not making any bitcoin transactions starting 31 July until it’s clear that things are back to normal. That could happen quickly, or it might take a few weeks.
But the second scenario is the one you really need to start preparing for now. How likely is this to happen? I don’t know, but the odds are certainly greater than zero. Some experts believe it’s likely. And like Jimmy mentions in the article, Bitcoin Cash futures are trading in the range of $450 to $500, so there’s apparently some element of the community that believes Bitcoin Cash is likely to thrive.
To get to the point of this post, the main thing you need to do now is make sure you control your private keys. The number one rule of Bitcoin is “if you hold the private keys, they’re your coins; if you don’t hold the private keys, they’re not your coins.” That’s true any time, but it’s especially important when there’s a likelihood of a fork.
So if you have any bitcoins stored on an exchange or other third-party service, I strongly recommend that you at least move them to a wallet that you fully control. Personally, I prefer paper wallets for significant amounts of bitcoin. Once you have full control, you will then have all options available to you after the fork–for the coins that you’ll then own on both chains. At that point, you might decide to sell some coins on one chain and buy more on the other, depending on how you expect prices to move.
But it’s important that you start this process ASAP. For example, Coinbase (referral link) has advised customers that it will temporarily halt all bitcoin transactions on 31 July, approximately four hours before the fork. And importantly, they have indicated they will not support Bitcoin Cash. So if BCC actually maintains some value after the fork, you will not have any ability to capitalize on it.
Now, if I’ve convinced you to take control of your coins, you should expect that there will be a flurry of transactions over the last 48 hours or so leading up to the fork, resulting in higher transaction fees and possible delays. To make things worse, if you’ve been routinely buying bitcoin through Coinbase for some time, and you’ve never sold or sent any of your coins to an external address, there’s a very good chance Coinbase will hold your transaction for 72 hours if you suddenly try to transfer all your bitcoin out. Bottom line–get started now!